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ANALYSIS OF RESULTS
The September quarter 2013 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0), to be released on 4 December 2013, will also incorporate these revisions from the 2012-13 issue of the ASNA.
Data from the SU tables are also used to construct Australian National Accounts: Input-Output Tables (cat. no. 5215.0.55.001), which present structural detail underlying the Australian economy and provide weighting patterns for Producer Price Indexes, Australia (cat. no. 6427.0).
The SU tables are not publicly available as they are an internal compilation tool of the ASNA that is used to generate balanced measures of GDP, implement revisions and facilitate construction of Input-Output tables.
OVERVIEW OF AUSTRALIAN ECONOMY IN 2012-13
The Australian economy expanded by 2.6% in 2012-13. Real net national disposable income grew by 0.1%. Terms of trade fell 9.7% in 2012-13 compared to a 0.4% rise in the previous year.
The Household saving ratio was 10.5% for 2012-13, down from 11.7% in 2011-12. Market sector labour productivity increased by 2.0%.
The major contributors to GDP growth in 2012-13 were Exports of Goods and Services increasing 6.1% and contributing 1.3 percentage points to GDP growth and Final consumption expenditure, increasing 1.8% and contributing 1.3 percentage points. Government final consumption expenditure increased 0.9% and Household final consumption expenditure increased 2.1%. Gross fixed capital formation by Public Corporations declined by 4.5% reducing GDP by 0.1 percentage points. The level of inventories grew $2.3 billion through 2012-13 compared to $6.5 billion through 2011-12, detracting 0.3 percentage points from GDP growth.
From an industry perspective, the largest increases in value added in 2012-13 were recorded by Mining (9.2%), Health care and social assistance (6.5%), Wholesale trade (4.5%) and Financial and insurance services (3.3%). Within the Mining industry, Oil and gas extraction and Iron ore mining recorded growth of 12.7% and 11.9% respectively in 2012-13. A number of industries saw declines for the year, including Agriculture, forestry and fishing (-5.5%), Other services (-4.6%), Information media and telecommunications (-2.6%) and Manufacturing (-1.2%).
For the Income components of GDP in 2012-13, there was growth in Compensation of employees of 3.6%, Taxes less subsidies on production and imports of 9.2% and Gross mixed income (GMI) of 0.7%. Gross operating surplus (GOS) decreased by 0.8%, the fall in GOS was mainly driven by Private Non-financial corporations (down 5.7%). Financial corporations GOS (7.9%) and Dwellings owned by persons (5.8%) experienced growth in 2012-13.
The annual movements for the chain price indexes for GDP and Domestic final demand were 0.0% and 1.9% respectively in 2012-13. The gap in price movements reflects the changes in the prices paid for imports and especially the prices received for exports.
The Net worth of Australia is defined as the difference between Total assets and Total liabilities. Australia's Net worth at the end of June 2013 was estimated to be $9001.8 billion in current prices, an increase of $561.1 billion (up 6.6%) since 30 June 2012.
Following the fall in GDP in volume terms in 1990-91 there have been 22 years of consecutive growth. In 2012-13 GDP increased by 2.6%. For some analytical purposes it is important to understand the impact of population growth on movements in GDP. In 2012-13, GDP per capita increased by 0.8%. Growth rates in GDP and GDP per capita are presented in the following graph.
Another measure of national economic activity is Real net national disposable income (RNNDI). This measure adjusts the volume measure of GDP for the Terms of trade effect, Real net income from overseas and Consumption of fixed capital (depreciation). In 2012-13, RNNDI increased by 0.1%, reflecting a drop in Net primary income from non-residents, as well as the Terms of trade falling 9.7%.
The Household saving ratio is another key aggregate in the national accounts. Household saving cannot be measured directly. It is calculated by deducting Household final consumption expenditure from Household net disposable income.
The Household saving ratio began trending downwards in the mid 1970's and reached a low of 0.3% in 2002-03. In 2012-13 the ratio was 10.5% down from 11.7% in the previous year.
Caution should be exercised in interpreting the Household saving ratio in recent years, because major components of household income and expenditure may be subject to significant revisions.
EXPENDITURE ON GDP
Final consumption expenditure increased 1.8% in 2012-13, and contributed 1.3 percentage points to GDP growth.
Household final consumption expenditure (HFCE) increased 2.1% and contributed 1.1 percentage points to GDP growth in 2012-13. The main contributors to growth in HFCE in 2012-13 were Total Rent and other dwelling services (up 2.3%) and Health (up 7.9%).
Government final consumption expenditure increased 0.9% in 2012-13, contributing 0.2 percentage points to growth in GDP. In recent years, Government final consumption has contributed between 0.3 and 0.7 percentage points to GDP growth.
Growth in Private investment increased 4.4% in 2012-13, compared to a 14.9% increase in 2011-12. Private investment contributed 1.0 percentage points to GDP growth, down from 3.1 percentage points in 2011-12. This increase was driven by investment in Non-dwelling construction (13.8%), which contributed 1.1 percentage points to growth to GDP.
Total dwelling investment decreased 1.4% and detracted 0.1 percentage points from GDP growth in 2012-13. Investment in New and used dwellings (down 1.0%) and Alterations and additions (down 2.0%) contributed to the decrease in Total dwelling investment.
Public gross fixed capital formation decreased 8.8% in 2012-13 following decreases in the previous two years. The fall in total public investment was driven by general government (down 10.7%) and by public corporations (down 4.5%). Public investment detracted 0.5 percentage points from GDP growth in 2012-13.
Growth in the domestic economy as measured by Gross National Expenditure (GNE), which is the total expenditure within a given period by Australian residents on final goods and services, showed an increase in 2012-13 of 1.6%. The difference between GNE and GDP is due to a positive contribution from Net exports and a negative contribution from the Statistical discrepancy.
In 2012-13, the industry shares of current price Gross value added (at basic prices) were similar to the year 2011-12. The industry with the largest share was Financial and insurance services with a share of 8.7%. Mining was the second largest industry with a share of 8.6%, while Construction recorded an 8.3% share. Mining has increased as a share from 5.3% in 2001-02 to 8.6% in 2012-13.
INCOME FROM GDP
The Compensation of employees (COE) share of Total factor income remained relatively stable throughout the 1990s up until the mid 2000s. The highest recorded value of compensation of employees share of total factor income was 62.1% in 1974-75. Since 2008-09, compensation of employees share has trended upwards, reporting 54.0% in 2012-13.
The profits share (based on Gross operating surplus for Financial and Non-financial corporations) of Total factor income reached 26.5% in 2012-13, down from the highest share recorded in 2008-09 of 28.8%. The profits shares recorded since the late 1980s are at a distinctly higher level than those reported at any time since 1959-60. Profit share of total factor income should not be interpreted as a direct measure of 'profitability' for which it is necessary to relate profits to the level of capital assets employed.
In 2012-13, National net saving relative to GDP decreased to 8.5%. This ratio generally increased from 1959-60 to a peak in 1973-74 of 16.4%. The series then gradually decreased, eventually reaching its lowest point of 1.5% in 1991-92. Since then National net saving has continued to increase.
In 2012-13, Financial corporations net saving was $27.5 billion. General government net saving was -$15.8 billion and net saving for Non-financial corporations was $20.2 billion. While Household net saving was $97.9 billion.
When analysing household saving it is useful to consider Household net worth, currently at $7,068.7 billion as of 30 June 2013. For more information please refer to Balance Sheets, page 12.
PRICES IN THE NATIONAL ACCOUNTS
Chain Price Indexes are used to measure prices changes. The annual movements in GDP and Domestic final demand chain price indexes for 2012-13 were 0.0% and 1.9% respectively. This gap in price movements was mainly caused by changes in prices paid for imports and the prices received for exports. Prices of Exports of goods and services showed a decrease of 9.3%, while the prices of Imports of goods and services showed a decrease of 0.2%.
The chain price indexes in 2012-13 for the other major components of GDP, Household final consumption expenditure and Gross fixed capital formation, were 2.7% and 0.6% respectively. See Table 7 for more details.
This update incorporates revisions to growth in chain volume value added for the market sector since 1996-97. The revisions were due to both updated source data as well as improved estimation methods in the supply and use tables. The revisions were significant for recent years, with 2010-11 growth revised down 0.3 percentage points to 2.2% and 2011-12 revised up 1.1 percentage points to 4.2%. Hours worked growth for the market sector was revised up 0.6 percentage points in 2011-12 to 0.9%, due to updated labour force survey source data.
On an hours worked basis, market sector MFP fell 0.5% in 2012-13 as total inputs (2.7%) exceeded market sector output growth (2.3%). Capital services grew 6.2%, while hours worked growth was soft at 0.2%. Labour productivity grew 2.0%.
On a quality adjusted hours worked basis, market sector MFP fell 0.8% in 2012-13. The weaker growth in MFP measured on this basis is due to the positive contribution of 0.3% from changes in labour composition. On a quality adjusted hours worked basis, labour productivity grew 1.4%.
Caution needs to be exercised in interpreting the MFP results, which are derived as a residual and are therefore sensitive to any measurement errors in the output and input measures. Furthermore, because the figures for productivity growth are relatively low, such errors assume relatively greater importance. In addition, year to year movements may reflect variations in capacity utilisation over business cycles.
Productivity growth cycles
A common method of examining changes in productivity over an extended period involves identifying and dividing the data into productivity 'growth cycles' (see Glossary). Productivity growth cycle peaks are determined by comparing the original MFP estimates with their corresponding long-term trend estimates. The peak deviations between these two series are the primary indicators of a growth-cycle peak, although the more general economic conditions at the time are also considered.
For the 1998-99 to 2003-04 cycle, MFP in the market sector grew 1.1% per year on average. Gross value added grew 3.5% per year over the same period while total inputs grew 2.5% per year. For the 2003-04 to 2007-08 cycle, MFP declined 0.5% per year on average. While Gross value added grew 3.6% per year, total inputs grew significantly stronger, at 4.1% per year between 2003-04 and 2007-08.
For both productivity growth cycles combined (1998-99 to 2007-08), MFP growth averaged 0.4% per year. Users interested in productivity measures over a longer time span can still access them via the Productivity data cube: Experimental Estimates of Industry Multifactor Productivity (cat. no. 5260.0.55.002) to be released on 7 December 2013. The longer time span is presented for 12 selected industries (ANZSIC divisions A to K and R).
Australia's Net worth at the end of June 2013 was estimated to be $9001.8 billion in current prices, an increase of $561.1 billion (up 6.6%) since 30 June 2012. Major contributions to this increase came from Land (up $199.4 billion), Non-dwelling construction (up $137.7 billion) and Shares and other equity (up $110.1 billion). Transactions in assets and liabilities contributed $200.0 billion to the change in Net worth, and holding gains rose $361.1 billion.
Australia's Net international investment position as at 30 June 2013 was a Net foreign liability of $816.9 billion, down $14.3 billion (down 1.7%) on the position a year earlier.
Australia's real net worth rose 3.4% over the year ended 30 June 2013, from 2.4% growth for the previous year.
Balance sheets are produced in current prices for each institutional sector in the economy. Of these, the household sector had the highest net worth at $7068.7 billion at 30 June 2013, an increase of $490.0 billion (up 7.4%) from the previous year.
INVESTMENT AT CURRENT PRICES
Investment represents about a quarter of the level of GDP. Understanding which sectors are investing and expanding their future economic capacity provides an insight into the underlying dynamics within the economy.
As a proportion of GDP, investment by Non-financial corporations fell during the 1970's and was reasonably stable through 1990's, generally above 10%. The proportion started growing during the 2000's and in 2012-13 investment by Non-financial corporations was 16.4% of GDP. Household investment as a proportion of GDP declined steadily between 1959-60 and 1974-75 and remained steady at around 9% to 10% of GDP until the mid 2000's where it has been consistently fallen below 10%. In 2012-13 the ratio to GDP was 7.9%, the seventh consecutive year it has been less than 10%. General government investment as a proportion of GDP peaked at 5.4% in 1966-67 and 1967-68 and has generally fallen since then. It was 3.1% of GDP in 2012-13. The highest ever level of Financial corporations investment, expressed as a proportion of GDP, was recorded in 1988-89 and 1989-90 (2.0%). It has generally fallen since then and was 0.7% of GDP in 2012-13.
In terms of the different asset types, in 2012-13 Private non-dwelling construction represented the largest percentage share at 33.1% of Total gross fixed capital formation, compared to 19.0% for Private machinery and equipment investment.
Over the last 10 years, as a share of Total gross fixed capital formation, both Private machinery and equipment and Private dwellings have fallen from 26.2% to 19.0% and 23.3% to 16.7% in 2012-13 respectively. The relative shares of investment in other asset types have remained relatively stable over the last 10 years, except Private non-dwelling construction which increased from 17.1% to 33.1%.
The importance of international trade to the Australian economy is illustrated by the following graph, which shows the ratios of Exports and Imports of goods and services to GDP in current prices since 1959-60. In 2012-13 the Imports ratio was 21% and the Exports ratio was 19.8%.
Since 2000-01 volumes of Imports have grown more strongly, up 151.5%, compared to 37.3% growth in volume of Exports.
In volume terms, Imports have been growing faster than Exports and the prices received for Exports had been decreasing faster than the prices paid for Imports for the year 2012-13. The Terms of trade represents the relationship between the prices of exports and imports. An increase (decrease) in the Terms of trade reflects Export prices increasing (decreasing) at a faster rate than Import prices.
Since 2000-01, Export prices have grown 40.6% and Import prices have fallen 18.1%. See Prices in National Accounts on page 8 for more details on Export and Import prices. In 2012-13 the Terms of trade decreased by 9.7%, following growth of 0.4% in 2011-12.
Net exports represent the difference between Exports and Imports. Net exports detract from GDP growth when the change in the volume of Imports has been greater than the change in the volume of Exports. In 2012-13 Net exports contributed 1.2 percentage points to GDP growth.
In addition to the trade in goods and services, the flow of funds between Australia and overseas is an important component of the relationship with the rest of the world. Australia has generally been a net borrower of funds from overseas. In the national accounts, this situation is reflected by a negative value for net lending to non-residents. The last time Australia was a net lender of funds to the rest of the world was in 1972-73. The ratio of net borrowing from overseas to GDP in 2012-13 was 3.7%, up from 3.2% in 2011-12.
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